EBL (Genossenschaft Elektra Baselland) and Tubo Sol PE2 S.L. v. Kingdom of Spain
ICSID · Investment (ICSID and treaty) · Spain · 11 Jan 2024
Why it matters
This award is significant as it clarifies the limits of regulatory change under the ECT in the renewable energy context. The Tribunal found that while Spain could modify its support scheme, a specific provision in Law 24/2013 that retroactively applied a 'reasonable return' calculation over the entire regulatory life of installations breached FET. The case also highlights the nuanced approach to costs where neither party fully prevailed.
Summary
The case concerns claims by EBL (a Swiss cooperative) and its Spanish subsidiary Tubo Sol PE2 S.L. against Spain under the Energy Charter Treaty (ECT). The claimants invested in a concentrated solar power (CSP) plant, Puerto Errado 2, relying on Spain's regulatory framework (RD 661/2007) which offered attractive feed-in tariffs for renewable energy. After the plant was commissioned in 2012, Spain enacted a series of measures (2012-2014 and 2019) that drastically reduced the remuneration for existing plants, including replacing the feed-in tariff with a new regime based on 'reasonable return' calculated over the plant's regulatory life. The claimants argued that these measures violated Spain's obligations under ECT Article 10(1) to provide fair and equitable treatment (FET) and to create stable conditions for investments. Spain objected to jurisdiction on several grounds, including that the claimants were public investors and that EU law precluded protection. The Tribunal rejected most jurisdictional objections but dismissed claims arising from a tax (TVPEE) for lack of jurisdiction. On the merits, the Tribunal found that Spain did not breach FET by changing the regime generally, as the original framework did not guarantee stability and Spain had legitimate reasons to address the tariff deficit. However, the Tribunal found a specific breach: Law 24/2013 provided that 'reasonable return' would be calculated 'throughout the regulatory life of the installation', which retroactively clawed back returns already earned. This feature was found to violate FET because it frustrated legitimate expectations that prior returns would not be revisited. Nevertheless, the claimants failed to prove any quantifiable harm from this specific breach, so no damages were awarded. The Tribunal ordered the claimants to pay 70% of Spain's costs. A partial dissenting opinion by arbitrator Nilsson argued that Spain's radical changes overall violated FET.
The detail
Parties: EBL (Genossenschaft Elektra Baselland) and Tubo Sol PE2 S.L. v. Kingdom of Spain
Case number: ICSID Case No. ARB/18/42
Outcome: The Tribunal found Spain breached its obligation of fair and equitable treatment under ECT Article 10(1) by providing in Law 24/2013 that 'reasonable return' would be calculated 'throughout the regulatory life of the installation', but denied all other claims and awarded no damages; Claimants ordered to pay 70% of Respondent's costs.
Applicable law: Energy Charter Treaty (ECT), ICSID Convention, Spanish law (including RD 661/2007, Law 24/2013, RD 413/2014), EU law
Issues in play: The case involved a collision between Spain's sovereign right to regulate its renewable energy subsidies and investors' legitimate expectations of stability under the ECT's fair and equitable treatment standard. The key issue was whether Spain's radical changes to the remuneration regime for concentrated solar power plants violated the FET standard.
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